Should I move out of my parents house?
I remember asking myself this exact question back in 2010. This a question we all have to ask ourselves at some point in our adult lives (unless of course you have no intentions of ever moving out).
And truth be told, the right or wrong timing when it comes to moving out can have a larger impact on your financial goals than you might think.
Today, we will explore when timing is best for moving out of your parents and the correct financial measures to take prior to doing so. Let's dive in!
8 Signs It Is The Right Time to Move Out of Your Parents Home!
While most articles that address the question on the best time to move out of your parents house focus on the social aspect, this article will primarily focus on the logistic/financial aspect.
Additionally, at the end we will cover a few steps to make sure you checkoff prior to ever moving out!
1. First and foremost, you're debt free (or close).
Look, this will be blunt, but pay off your debt prior to moving out.
“If not now, then when?” should be your approach to debt especially credit card debt you racked up in college or those pesky student loans.
It's really easy to pay off your debt when you live at home and you're not obligated to pay expensive rent. The same can't be said when you're living on your own.
Be hyper active paying off your bad debt – really all debt – so that you can move out in good financial standing.
2. You have money saved
Having money saved doesn't mean you're an investing expert and you have mastered the concept of backdoor IRAs, it means you have money in a savings account.
How much should you have saved prior to moving out?
Enough to cover your desired/targeted living expenses. For example, let's say your rent and utilities cost you $1,500 per month when you go to move out.
At the very least, you would want to have a least $4,5000 (three months) and ideally $9,000 (six months) saved up.
3. No new cars
If you made the number one college graduate mistake and bought a new car the minute you got your first job, you shot yourself in the foot.
Something you need to be aware of is your debt to income ratio prior to moving out. Your DTI determines how much home you can afford when you buy a home and sometimes even rent.
Whatever you do before moving out, don't buy a new car! If you already bought a new car, while it might seem like a shot to your ego, you should consider downsizing and be sure to follow the 25% rule.
Knowing how much car you can afford starts with recognizing that your car's value should never exceed 25% of your annual gross income. For example, if you make $60,000 per year, you car new or used should not be worth more than $15,000.
4. You are commuting too far!
It might be time to move out if you find yourself commuting too far.
While living at home certainly sees like a luxury at times for those who already live on their own, if you're commuting over 60 minutes per day, you might be feeling a little bogged down.
My first job resulted in my commuting 45 minutes one way, or 90 minutes per day. One day a week I would say at a friends that reduced my commute to 20 minutes… those days were amazing.
All this to say if your commute is killing you, it might be time to move closer!
5. You have given up the urge to splurge!
Sometimes we need to live at home until we can get our spending under control.
Why would someone want to do that you might ask?
Well if you're spending is not under control while living at home with lower living expenses, it's going to be harder to manage when you live on your own.
Use the time at home to curb impulse buying and overspending. Get your financial habits in order prior to considering making the biggest move of you rlive – moving out for good!
6. You are in a serious relationship
You know it is time to move out when you're in a serious relationship and/or married.
Simply put, if your parents are treating you like a middle school student dating for the first time – but you're on the cusp of marriage or knee-deep in a long-term relationship – it might be time to move out.
The most common reason many will ask, “Should I move out?” is because of relationships!
7. You need your freedom back
Similar to #6 above, if you feel like your freedoms are gone because you moved back home after college or you simply have never moved out in the first place, regardless – you need to move out.
If you have a curfew, need to check in and you still feel like you're in high school… but you're over the age of 22… it's most likely time to move out! That being said, be sure you can do it, see #8 below:
8. You can afford it!
Too many young adults move out for all the wrong reasons.
Be it a friend, a partner, social life, or a job – they move out and put themselves in a tight financial position. This makes it hard to pay down debt, save for a home, or do things without racking up credit card debt.
In fact, one survey stated that 69% of millennials can't afford to buy a home. Put another way, that is a high percentage of millennials and young adults who can't afford to live on their own (yet).
So while you may think it's time to move out of your parents, be sure it is something you can afford prior to just doing so!
4 Steps to Take Prior to Moving Out:
Now you know when it makes sense to move out, but how do you get to that point if you're not there(yet)? Here is how in four simple steps.
Prior to ever moving out, regardless of how bad you want to move out, you need to first make sure you have saved up enough money!
How much is enough?
That depends, but in general, you want to first start with a budget and identify what your monthly fixed expenses are (go ahead and predict rent too).
Next, take that number and multiply it by three, ideally six. Whatever you get is at the bare minimum of what you should have saved prior to moving out!
Saving money ideas include:
- Save using the “Pay yourself first” method
- You can save up fast, simply by automating your savings.
- Cut back on expenses and also subscriptions – use Trim to help.
- Keep your savings account separate from checking (so you're not tempted to use it)
- Use services like Savology that offer free tools to help you know how much to save
Pay off your debt.
If you have money saved up and at least three month expenses ready to go in an emergency fund you have step one covered when it comes to moving out of your parents house.
That being said, to really set yourself up right prior to moving out and to avoid the financial stress that sometimes comes with living on your own, be sure to pay off your debt.
Chances are, if you're a college graduate, you have student loan debt.
It's not a bad idea to live below your means while living at home and throwing 50-75% of your income at your loans until they're gone!
This may seem like a hyper-aggressive debt strategy, but once you move out the opportunity to aggressively pay off student loan debt is greatly reduced because of increased living expenses.
Use this link to pick a debt strategy and figure out which is the best order to knock out debt. It's not going anywhere, so might as well take care of it!
Pay “Yourself” Rent
This is by far one of the most underrated tips that should be implemented before ever moving out or buying a home.
Pay yourself rent.
Prior to moving out and to avoid becoming house broke, the idea of paying yourself rent is simple. Living on your own means you will be paying rent or mortgage payments, most likely on the 1st of each month.
That being said, get used to paying that “Rent Payment,” each month by paying your savings account. Simply look into how much you will be paying when you live on your own and on the first day of the month, throw it into your savings account.
Here is why:
- If you can't pay yourself rent on the first, how you going to pay someone else?
- This method will help you prepare for getting used to paying rent and you may have to adjust your lifestyle – something you would want to know ahead of time!
- Lastly, you would save more money this way, which is a never a bad thing.
Lastly, don't forget to factor in the costs of utilities and things of that nature. All of these living expenses add up and they might indicate that you're not as close to moving out as you thought you were.
A short term option to help is to make more money on the side, but that is also something you don't want to rely on!
Lastly, complete your due diligence
Money is power when it comes to moving out. Don't be ignorant prior to moving out and blindly leave your parent's house simply because you feel like it.
Part of being an adult is making logical decisions, not descions on how you “Feel,” aka emotional choices. This may seem blunt and even harsh, but it's only to benefit you and your future!
Don't blindly move out of your parent's house to get yourself into a bad situation. A bad situation such as:
- A roommate situation that isn't ideal
- A luxury apartment that costs over 30% of your gross income per month
- A condo with high fees
- A mortgage you cannot afford
- A place in the bad part of town
Moving out is a big decision we all must make… but this means we must treat as such.
Be sure to make a pros and cons list prior to ever moving out and be honest with yourself. Don't stack the pros and neglect the cons. Research market trends and lastly, be patient!
Being patient will set you up right and as long as you follow the four steps from above, you will know it's the right time to move out!
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! I got serious with money when I used Personal Capital to track my finances.